United States markets ended lower on Friday (Saturday AEST), with weakness in AI-related chip stocks outweighing strong gains in healthcare, as investors continued to assess elevated inflation, geopolitical tensions in the Middle East and the outlook for US interest rates.
The Dow Jones Industrial Average fell 0.1% to 51,876.1, while the S&P 500 slipped 0.1% to 7,354.0. The Nasdaq Composite declined 0.2% to 25,297.6.
For the week, the Dow gained 0.6%, while the S&P 500 lost 2% and the Nasdaq fell 4.6%.
Technology stocks remained under pressure as investors questioned how long it may take for substantial investment in artificial intelligence infrastructure, including data centres, to translate into higher corporate earnings.
Apple rebounded 3.1%, recovering part of Thursday's sharp decline after the company increased prices for its iPad and MacBook ranges, citing higher memory and storage chip costs.
Healthcare stocks outperformed, with Moderna surging 12.6% to its highest level since 2024 after the biotechnology company hosted an investor event highlighting its product pipeline.
Investor sentiment was also influenced by Thursday's inflation data, which showed U.S. consumer prices rose above 4% in May.
The stronger-than-expected reading, driven largely by higher energy costs following the Iran conflict, reinforced expectations that the Federal Reserve could still raise interest rates later this year.
Although oil prices have retreated sharply as tensions in the Middle East eased, reports of further attacks over the weekend kept geopolitical risks firmly in focus.
Luka Belobrajdic, Economist at Westpac Group, commented:
"the U.S.-Iran conflict returned to focus over the weekend, with both sides striking military infrastructure and further straining the ceasefire currently in place.
The latest escalation followed Iran’s attack on a ship transiting the Strait of Hormuz late last week, prompting a U.S. response the following day.
"The U.S. launched further strikes after Tehran attacked another vessel on Saturday. President Trump suggested the U.S. may be forced to “military complete the job”, while both sides have accused the other of violating the ceasefire.
"Ships continue to transit the Strait in limited numbers."
Risk appetite was further dampened by reports that OpenAI was considering delaying its public listing until next year, adding pressure to AI-related shares.
SpaceX shares edged 0.2% higher as passively managed index funds prepared to purchase billions of dollars worth of stock ahead of the company's inclusion in Russell indexes.
ON Semiconductor slumped 23.7% after agreeing to acquire Synaptics in an all-stock transaction valued at about US$7 billion. Synaptics shares also fell 3.7%.
Economic data offered a mixed picture, with a survey showing U.S. consumer sentiment rebounded from record lows in June, although households continued to express concern about the elevated cost of living.
On the bond markets, the yield on the 10-year U.S. Treasury fell 0.3% to 4.376%, while the two-year Treasury yield declined 0.7% to 4.096%.
